You are not alone.
Sales tax can be an overwhelming concept for business owners. For new businesses it’s challenging to make sure you’re adhering to all the rules while creating something from scratch. For existing businesses, keeping up with local and state tax changes can cost you a lot of time and even more money. U.S. sales tax is highly complex because the rules are determined by each state and local areas within states may assess additional fees. This means we have more than 10,000 different tax rates for businesses to understand and adhere to.
That sounds like a lot, so let’s take a step back.
To comply with all of these various sales tax rules, you really only need to know if you’re required to pay sales tax and, if that answer is yes, how much you have to collect.
Most businesses are required to collect some form of sales tax on their products and some services are taxable as well. The simpler your business, the simpler your collection of sales tax.
Nexus provides a set of standards to determine your sales tax obligation.
Nexus rules define where sales tax is required based on certain connections to each state (in fact, the word ‘nexus’ means a connection or link). Tax connections include things like physical location of stores, inventory, employees, or customers. 43 of the 45 states with sales tax use nexus to determine collection requirements. Most of these states allow exceptions for small businesses and only require sales tax after a certain amount of revenue is generated. Additionally, sales tax exemptions can help businesses reduce the amount they are required to pay.
Permits are required to play.
A sales tax permit must be received from each state before collecting sales tax. As part of the permitting process, the state issuing the permit will assign a filing frequency and due dates (typically monthly, quarterly or annually). Your frequency and deadlines can vary from state-to-state, which also adds to the complexity of complying with U.S. sales tax.
Don’t worry. OYA has you covered.
It’s true that sales taxes are complicated. It’s also true that you can handle them. Our tools make understanding your state-by-state requirements simple and we stay on top of the regulation changes so you can stay on top of everything else. Can you handle sales tax? OYA you can!
Get started with our Nexus Tracker and Marketplace Monitor.